Auckland's residential property market

The residential property market in and around Greater Auckland is delicately yet comfortably poised in a state of equilibrium at present.

In essence, it’s a static market – with prices up ever so slightly at around one percent year-on-year, while the total inventory of housing stock for sale (the total number of residential listings minus sales) is sitting virtually bang-on its long-term monthly average.

Further balancing out that supply and demand equation, demand has been well and truly tempered since its peak – A) with a number of ‘local’ buyers now out of the market thanks to the lending regulations introduced by the Government and the RBNZ… even though those restrictions have been somewhat relaxed, and B) the slowdown in foreign buyer interest driven mainly by restrictions in moving funds out of China.

Additionally, with average rental yield rates now sitting at around three percent for investors, many in that sector had been looking at other opportunities – be they in the commercial property sector, equities, or paying down existing debt when their fixed rate mortgages come off. That was until the world-wide share market events on Waitangi Day.

Some six months of stability in the housing market had set the groundwork for the coming year. Or at least it had until the global equities realignment which sent tremors around the world early last month.

While New Zealand’s share market was spared the rollercoaster revaluations seen elsewhere around the world, we have noticed the nervousness here did have the immediate effect of sending many investors back to the relative security of ‘bricks and mortar’. Houses and apartments.

We’ll see the exact and full impact of this potential return to property as an investment class evolve and play out over the coming months. Look for the number of residential property investors to increase should global stock markets suffer another sudden rapid drop as they did in early February.

Any refocus on residential property as an investment class will have been positively underpinned by the reserve bank’s decision last month to keep the official cash rate in its status-quo, with an underlying theme of ‘steady as she goes’ for the remainder of the year. That is re-assuring for investors calculating their funding requirements.

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